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Loomis, Sayles & Company, L.P.

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

At the heart of Loomis Sayles’ investment management process is the goal of providing superior long-term, risk-adjusted returns for our clients. We fully recognize the important role that environmental, social and governance (“ESG”) issues play in the global economy, financial markets and society at large. Our investment teams take into account a wide range of investment criteria that could impact the sustainability of issuers.  We support our investment professionals in considering ESG factors that may be material to investment performance.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

We believe that ESG issues play an important role in the global economy, both from a business and investment perspective. Loomis Sayles embraces its duty to act at all times in our clients' best interests, and we believe that ESG issues impact our goal of achieving superior, risk-adjusted returns. We understand that environmental, social, and corporate governance practices may present risks that need to be evaluated, and we analyze these risks as part of our fundamental research process.With respect to integration, we expect our investment professionals to consider all available macro, fundamental and quantitative research insights, including those related to ESG. With respect to screening, Loomis Sayles does not impose any ESG restrictions or exclusions on the investment process. Any screening is mandated by our clients' guidelines, or by regulation.

Our research analysts take into account a wide range of investment criteria, including potential ESG-related risks and opportunities that could impact the desirability and suitability of investments. The analysts strive to develop a thorough understanding of the risks and opportunities associated with an issuer’s management strength and strategy, governance, and use of human and natural resources, as well as regulatory and political risks. These factors are critical to evaluating the long-term sustainability of an issuer, its profitability and, ultimately, its expected contribution to client portfolios.

Investment risk (including ESG related issues) is continuously monitored by the PMs and the CIO through the various reports and analysis, as well as through the reports and stress test scenarios produced by QRRA and the research teams. The reports generated by these risk measurements are used by the CIO for the overall oversight of the active investment strategies offered by Loomis Sayles. The CIO oversight also forms the basis for discussions during the Investment Risk Review Committee meetings.

The Investment Risk Management Group “IRM Group” was created to aid the CIO in oversight of the numerous products we currently offer. This group is led by the Chief Investment Risk Officer ("CIRO") who has five direct reports. Reporting directly to the CIO, it is the responsibility of the CIRO to independently monitor the contributions to risk and return from various sources such as: market risk, credit risk, sector risk, interest rate risk, currencies, liquidity, counterparty exposure and securities, on both an absolute and relative basis. In addition, the CIRO will lead the CIO & Investment Risk Review effort, in understanding strategy, risks, implementation, processes, and sources of dispersion for each product.

In addition, Loomis Sayles has designed and implemented a proxy voting policy in the best interests of its clients, and such policy takes into consideration ESG matters.

01.6. Additional information [Optional].


SG 01 CC. Climate risk (Not Completed)

SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.


02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

Understanding and incorporating client/beneficiary sustainability preferences: Loomis Sayles does not impose any ESG restrictions or exclusions on the investment process. Any screening is mandated by our clients' guidelines, or by regulation, and we strive to ensure that we have understood any preferences that are expressed in the client's guidelines.

Climate change: Over the last year we developed a technology portal, the ESG Center, that serves as a central location for external and internal ESG data and tools.  We have the ability to measure and monitor the carbon footprint of our portfolios, and compare it to relevant benchmarks, using our MSCI calculator.  We plan to incorporate this data into our ESG Center. In addition, we have assessed a number of additional data vendors and are considering integration of their carbon footprint tools and climate change data. Lastly, our Chief Investment Risk Officer has incorporated carbon footprint data and other ESG metrics in his semi-annual investment team reviews.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Loomis Sayles may encounter potential conflicts of interest.  The potential for encountering such conflicts may arise as a result of the types of clients it advises, clients' investment strategies, or the presence of competing interests.  By favoring itself, a related party or another client, Loomis may fail to act in the best interest of a client.  When assessing a potential conflict of interest, Loomis must consider whether it: (1) is likely to make financial gain, or avoid financial loss, at the expense of client; (2) has an interest that is separate and distinct from that of the client in the outcome of the service provided to the client or of a transaction carried out on behalf of the client; (3) has a financial or other incentive to favor the interest of one client over that of another client; or (4) receives from a person other than the client an inducement in relation to the service provided to the client, in the form of higher fees. Loomis Sayles regularly reviews its business to identify potential conflicts of interest and adopt appropriate policies and procedures to manage new conflicts. The firm also has oversight committees to monitor conflicts of interest.  

03.3. Additional information. [Optional]

While we are not currently signatories to the ICGN Global Stewardship Code, it is in the spirit of many of the organizations that we continue to learn about and assess for potential official adherence.   Within the ESG and sustainability space, we continue to assess best practices, for example, we are signatories to the UK Stewardship Code and the LGPS Transparency Code.  More generally, although it is impossible to anticipate all possible conflicts, Loomis Sayles has indentified those potential conflicts that the firm believes it is most likely to encounter while pursuing its normal business operations. Loomis Sayles' Conflicts of Interest Policy provides an explanation of the firm's policies and procedures for mitgating and managing risks associated with: (1) production and use of inaccurate and/or misleading sales and marketing materials; (2) affiliated trading that favors broker-dealers employed by Loomis Sayles' parent company against the best interests of Loomis Sayles' clients; (3) use of soft dollars generated by clients' commissions to offset Loomis Sayles' costs otherwise incurred; (4) use of financial benefit from errors in a way not in the best interests of clients; (5) relationships with broker-dealers that provide incentives not in the best interests of clients; (6) receipt of gifts and entertainment that could influence recommendations not in the best interests of clients; (7) allocation of investment opportunities that does not treat clients equitably; (8) payment of performance fees received by investment teams that cause preferential treatment to hedge funds managed side by side with other products; (9) cross trading of securities among client accounts in a manner not in the best interest of all accounts involved; (10) allocation of client transactions to broker dealers as a reward for certain sales that may result in best execution; (11) personal trading not in the best interest of clients; (12) engagement in outside business activities that conflict with the best interest of Loomis Sayles and/or its clients; (13) investing in private placements that may create a conflict of interest; and (14) inappropriate pricing of securities for products and accounts that are charged fees based on the value of clients' portfolios. 



SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

Loomis Sayles' research analysts are responsible for identifying and reporting on incidents that occur within portfolio companies as part of their coverage of those companies. We consistently measure and monitor analysts' views, ratings and recommendations relative to outcome.